Argentina's president has warned that substantial progress in restoring the country's relationship with the International Monetary Fund (IMF) is unlikely during talks between the two sides this week.

Argentina last week defaulted on $1bn of debt owed to the World Bank, jeopardising its prospects of restoring relations with international lenders.

"I don't think we should build expectations over this visit" by the IMF, said Argentine President Eduardo Duhalde, describing the talks as "purely technical".

The IMF has refused to lend Argentina any more money since it missed repayments on $141bn of private loans last year, the biggest ever default by an international borrower.

Warnings

In recent months, IMF and World Bank officials have warned the Argentine government of serious consequences if it reneged on any more repayments.

The IMF has set tough conditions for the resumption of international aid, demanding deep spending cuts and protection for foreign investors, and it remains unhappy with Argentina's response.

Bankrupt Argentina, which is in its fourth year of recession, is now considered to be in the same league as Iraq and Zimbabwe in terms of defaulting on multilateral loans.

It was once known as the bread basket of Latin America, but unemployment is now over 20%, and there have been tens of deaths from starvation.

Argentina's latest defaults involved a loan repayment of $726m (�441m), and a $250m bond due on Monday that was guaranteed by the World Bank.

About $2.4m in interest is also due.

Anti-poverty programmes

"We're not saying the blame for what's wrong should be pinned on the fund (IMF)," cabinet chief Alfredo Atanasof said when he announced the money would not be repaid on time.

"We assume the responsibility as a country... but what we are saying is the bureaucracy at the Fund has promoted the policies that put us in this situation."

The World Bank, which has now halted disbursement from $2bn of existing loans, had provided the last major credit line open to Argentina.

The country has relied on World Bank money to help fund social programmes and finance businesses.